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That, my friend is ugly. The first shot from the hip would be to start figuring on a rebuild, and to be ready for a cracked block. Now, the optimistic side wants to dig deeper before condemning the engine.

First, vacuum out all that crud so you can see better what you have beneath. Drain the engine oil to see if the engine is full of water, instead of oil. Next, if no major issues are found, soak everything down with marvel mystery oil, transmission fluid, and any old cheap oil you can find to soak. This process will take the most patience. After soaking a while, attempt to wiggle the crank shaft with a socket and breaker bar. If there is still a build up of rust in the cylinders, use a dingle ball hone to clean up the cylinder walls. If no cracks or deep gouges are found, then there is still hope even if the Pistons are still stuck. I say hope, but by this time, if the engine shows no signs of budging, then it will be time to start a rebuild.

visual inspection not enough, need measurments, and dimensions from qualified person to measure bore, lot of metal there and hope is not lost, believe me first thing is to vacume all of it out, then got to strip the block down to bare metal, all the way

As pelago says, you need some measurements and if you don't have the right equip for that then you need a good machine shop. The worst hole needs to be cleaned, honed and measured to know that it is still within tolerances. It is not only the cylinders but also valves, valve seats, rods, and mains. it's all steel and can be rebuilt, just how deep you want to go into your pocket vs finding a replacement cost.

It appears that the engine has spent time underwater. Whether the rust came from the exhaust system, and filtered up into the engine? Is it rust or mud deposits? It isn't impossible, but highly unlikely that the head has flaked off that much, unless it was in salt water, in a warm climate. After going back and re-reading the post, he said that the head studs and head came off easily. If that was rust accumulated in the cylinders, then more than likely, the head would be fused to the studs. Even the head gasket is in decent shape, and the block surface doesn't look that bad.

I think the top half of this engine was a rodent motel for decades... lower half seems okay, oil was normal, green antifreeze still in there. 3 or 4 valves seem rusted to the block. In no hurry at all to try and move anything. Just soaking the pistons in mystery oil and keeping the valves wet with penetrating oil. Still dismantling the rest of it down to the frame and now playing with the Buick.

It's a lot more promising than I expected. The block looks darned near perfect under the valve guides. Spray them down, smack the open valves with a rubber hammer. Looks like you may get away with a new set of valves/valve guides, and new valve seats. This visual assessment doesn't figure in to the cylinder wear, but having good coolant and full of oil is a great sign.

you know, oil and heat do a lot of things,,, loosen things up, apply some heat with a propane torch, then some oil, then a block of wood and a 16oz ball peen/machine hammer and tap it some, not heavy but some taps with block of wood on metal... might see some stuff start to move and that helps in dismantle. been there and done it